Charges to survivors called wrong and illegal

"We're very pleased with the ruling. We hope it puts a stop to this behaviour," says Truth and Reconciliation Commissioner, Manitoba Justice Murray Sinclair. Photo Store

A Winnipeg law firm, slammed by a judge for its "unconscionable" treatment of Indian residential school survivors, may be far from the only culprit in a practice that affected at least 1,000 clients from the Northwest Territories to Ontario.

Six other Manitoba law firms are listed by the judge as having been served notices in the court action. None has been found guilty. Manitoba Queen's Bench Justice Perry Schulman stated Winnipeg lawyer Ken Carroll and the First Nation Residential School Solutions Inc. were a test case for the legal principle.

At issue in the 55-page judgment is a practice where "form fillers" linked to law offices did the claims work for residential school survivors and charged a 15 per cent to 25 per cent contingency fee.

Lawyers are entitled to a maximum legal fee of 30 per cent of an award, with the claimant and the federal government each chipping in half. Many claimants were paying additional fees to agencies that helped complete their paperwork. Schulman ruled the bulk of that work should have been done by lawyers at no extra charge.

Schulman ruled such fees, on top of the legitimate legal fees, were wrong and illegal.

'We're very pleased with the ruling. We hope it puts a stop to this behaviour'

-- Justice Murray Sinclair

Schulman has declared null and void all agreements in which claimants are required to pay contingency fees to form-fillers, or to pay form-fillers through any means for legal work that should be done by lawyers.

The judge has also ordered a review to establish a way to reimburse claimants for form-filling costs.

"We had a lot of these complaints. Survivors complained about lawyers' fees a lot and it appeared that some lawyers and form-fillers were either not aware of the rules or were deliberately flouting them. We're glad it was referred to court... and we're very pleased with the ruling. We hope it puts a stop to this behaviour."

Thousands of claims for compensation for abused residential school survivors have yet to be heard; others have already been paid and it will be up to the courts to chase down the money they lost.

Beyond the damage to clients, the practice raises troubling questions about the practice of law and ethics, experts say.

"Given this finding... we can say of these people who are doing it, that they are unethical and perhaps open to legal sanctions. And to the extent that lawyers are involved, they are open to professional sanctions," said Arthur Schafer, director of the University of Manitoba's Centre for Professional and Applied Ethics.

The Law Society of Manitoba reported Monday it is pursuing investigations on the heels of the judgment. Its provincial statutes prohibit details of the probe until lawyers are found guilty.

Those investigations may include not just lawyers, but the form-fillers. If not, then maybe they should, said Winnipeg lawyer Paul Walsh.

"It's all work for a lawyer," Walsh said. Neither he, nor any of the lawyers he knew who have residential school survivors as clients resorted to the practice of setting up separate agencies to do the work usually done at law firms.

"This notion, that form filling is a function distinct from regular legal work? I'd never heard of it," Walsh said.

In effect, lawyers appear to have set up artificial organizations that then extracted extra fees from clients, Walsh said.

"There seems to be enough of a case that these form-fillers were practising law, without a licence. They leave themselves exposed to court action, by the law society," Walsh said.

Darren Audy, a director of Sakastew Inc., one of form-filler agencies Schulman listed in the judgment, said the best way to halt the practice is to cut the lawyers and firms such as his out of the residential school business entirely.

"If they (the federal government) are really sincere about paying back the torment to survivors and their families they should be taking over, getting the letters out to the survivors and covering all their costs," Audy said.

The experience left him with a bitter taste, he said.

"We tried our best at Sakastew but we didn't make any money off it. And we put ourselves in debt, huge debt. We had to fold the company," Audy said.

Schulman's ruling focused on experiences of two survivors with the Carroll law firm in Winnipeg.

In one, a terminally ill woman said her Winnipeg lawyer, Ken Carroll, insisted she take a 10-hour bus trip from Thunder Bay, Ont., to pick up her compensation cheque. Once here, two officials with the form-filler agency escorted her to the bank and insisted on a $8,100 fee from her settlement before letting her leave. Carroll later repaid the woman and another client who was treated the same way, the judgment stated.

In depth

A Queen’s Bench court judgment that ruled clients were illegally charged fees against residential school settlements named six Winnipeg law firms and various local form-filler agencies that worked with them.

The Winnipeg Carroll Law Firm and the First Nation Residential School Solution Inc. agency served as a test case in the ruling.

But the other firms were also served as part of the court process.

The Chief Adjudicator for the Independent Assessment Process with the Residential Schools Secretariat asked the Manitoba Queen’s Bench Justice Percy Schulman for direction on fees charged against settlements.

The federal agency alleged the lawyers and the form fillers exercised “inappropriate, sometimes coercive tactics in collecting fees...” They ranged from 15 percent to 25 per cent of client’s settlements.

The firms are Winnipeg-based but the clients are scattered from Ontario to Manitoba and Saskatchewan to Nunavut and the Northwest Territories.

Schulman noted repeated notices of the court action was served on “30 form fillers and legal counsel who appeared to be engaged in some or all of the impugned practices considered by this court”. In addition to Carroll and his agency they included:

History

Updated on Wednesday, June 11, 2014 at 3:33 PM CDT: Replaces box.

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